Read This Before You Launch a Ghost Kitchen

Ghost kitchens, also known as cloud or dark kitchens, are commercial kitchens that prepare food for delivery and pickup but don't have a physical storefront. They gained wide adoption during the COVID-19 pandemic as restaurants adapted to changing consumer behavior. Though growth has slowed since the lifting of lockdown restrictions, commercial kitchens still have significant potential to generate additional revenue by making wise choices in creating a ghost kitchen.

The rundown on ghost kitchens

• Ghost kitchens operate digitally, with menus only available on third-party delivery apps and online ordering websites.

• Customers exclusively place orders through online platforms, with no dine-in option.

• They can be located in existing restaurants or standalone commercial kitchens.

• Ghost kitchens can operate multiple "virtual" restaurant concepts from the same kitchen, catering to different customer tastes and dietary needs. 

• Staff focuses solely on cooking and packaging orders for delivery, streamlining operations.

  
  As a commercial kitchen operator, if you want to get into the ghost kitchen game, you’ve got choices. Whether you're considering launching delivery-only concepts separate from your current brand, leasing your space to another business, or offering short-term rentals to catering and specialty food businesses, understanding the trade-offs can help you maximize your kitchen's productivity and super-size revenue.

  
  Check out the article below for tips and some pros and cons of turning your space into a ghost kitchen.

6 Things to Think About When Launching a Ghost Kitchen

1. Concept and business plan:

   • Identify a niche or unique concept for your digital restaurant.

   • Develop a detailed business plan that includes financial projections, delivery logistics, and marketing strategies.

2. Menu creation:

   • Develop delivery-optimized dishes. When your core business is delivery, it’s important to keep in mind how different foods travel. Dishes like burritos, fried chicken, and sushi travel well and taste delicious even after waiting as much as an hour to be enjoyed. On the opposite end of the spectrum, dishes like milkshakes, grilled salmon, and steak do not travel well. 

   • Consider how your existing chefs and staff will be able to adapt to your new menu.

   
   

3. Branding and online presence:

   • Create a brand distinct from your dine-in operation. A strong brand will help you stand out to customers. 

   • Leverage delivery platforms (Uber Eats, DoorDash, etc.) and digital marketing to put your new brand in front of potential customers.

   
   

4. Operational considerations:

   • Ensure compliance with health and safety regulations.

   • Address staffing, inventory management, and quality control.

   • ​​Evaluate start-up expenses and ongoing costs.

   • Consider adjustments needed for delivery optimization.

   
   

5. Protect yourself from chargebacks that aren’t your fault:

   • Driver errors and fraudulent customer claims happen, but your business shouldn’t pay for them. Use a service like PrepProof to automatically challenge disputes that aren't your fault.

   
   

6. Data analysis:

   • After launch, monitor sales and customer feedback to make adjustments to your menu and operations.

   
   

Closing Thoughts

• Running your own ghost kitchen gives you complete control and the ability to test new concepts, but increases operational complexity and financial risk.

• Renting your space as a ghost kitchen to another brand offers a steady, passive income stream with lower direct management responsibility, but you trade off control and face potential logistic challenges.

• Short-term rentals to catering companies or specialty businesses provide flexible, on-demand income with minimal long-term disruption, though they come with administrative, scheduling, and maintenance challenges.

Each option has its trade-offs, so you’ll need to evaluate how much time and risk you’re willing to take on versus the potential for increased revenue and better asset utilization.

Approximately 4% of delivery orders result in a chargeback, costing tens of thousands of dollars in revenue per location annually.

PrepProof helps franchise operators automatically dispute unjust refunds and recover lost revenue. No matter how your subscription is configured, PrepProof ensures you will walk away with increased revenue every month. If you work with delivery service providers, you need PrepProof. You only pay when you win money back.

Ready to see a demo? It only takes 10 minutes.